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Pipeline updates are highly awaited events in the pharma/biotech sector as they play an important role in deciding whether or not to invest in a particular company. These updates provide information on experimental drugs and sometimes give an insight into the commercial potential of the candidate once it is successfully developed and commercialized.

Earlier this week, Gilead Sciences, Inc. (GILD - Analyst Report) announced that Health Canada has issued a Notice of Compliance for its chronic hepatitis C virus (HCV) drug, Sovaldi. In May this year, Sovaldi’s marketing authorization application was submitted in Canada for the treatment of adults suffering from compensated liver diseases like cirrhosis. The indication also includes treatment of genotype 1 or 4 chronic hepatitis C (CHC) infection in combination with pegylated interferon and ribavirin and also genotype 2 or 3 CHC in combination with ribavirin.

Sovaldi is currently going through a reimbursement review process in Canada. Gilead expects to launch the drug in Canada early next year.

Current HCV therapy in Canada includes treatments of up to 48 weeks with a pegylated interferon/ribavirin-containing regimen. Sovaldi’s approval will bring down the duration of therapy to a minimum of 12 weeks. Approximately 250K people are estimated to be affected by chronic HCV in Canada alone.

The Notice of Compliance from the Canadian health authority came shortly after Gilead gained U.S. approval for Sovaldi as a combination therapy for treating patients suffering from chronic HCV, the primary reason behind liver cancer and liver transplantation in the U.S. Sovaldi is currently under review in the EU, Australia, New Zealand, Switzerland and Turkey.

Our Take

Sovaldi is an important product not only for Gilead but also for HCV patients who have postponed treatment as they await the launch of a better therapy. Sovaldi has many factors that should work in its favor – high cure rates, a short treatment period and reduction/elimination of the need for interferon injections. It has the potential to change the treatment paradigm in the HCV market.

Gilead, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biopharma space include Actelion Ltd. (ALIOF), Jazz Pharmaceuticals (JAZZ - Analyst Report) and Vanda Pharmaceuticals Inc. . All these stocks carry a Zacks Rank #1 (Strong Buy).

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